IHT

The United Kingdom legislation provides that transfers between domiciled spouses or civil partners are exempt from inheritance tax. However, transfers between domiciled and non-domiciled spouses or civil partners are not exempt from inheritance tax. Furthermore, in the latter case, the rules on the nil rate band applicable to subsequent transfers differ and may result globally in higher taxation. The Commission believes that the difference in tax treatment of transfers between domiciled and non-domiciled spouses is of a discriminatory nature and contrary to EU rules.

The Commission's has sent a reasoned opinion to the UK Government which is the second step of the infringement procedure. If the UK Government does not provide a satisfactory rationale for the current regime within two months, the Commission may decide to refer the matter to the Court of Justice of the European Union.